US STOCKS-Futures drop in wake of Fed's stimulus-tapering outline

Reuters Staff

2 Min Read

* China, euro zone threaten U.S.-led economic recovery

* Forest keen to bid for Irish drugmaker Elan

* Futures off: Dow 107 pts, S&P 14 pts, Nasdaq 28 pts

NEW YORK, June 20 (Reuters) - U.S. stock index futures fell on Thursday, adding to a more than 1 percent drop in U.S. equities a day earlier, after Federal Reserve Chairman Ben Bernanke outlined the start of a wind-down of stimuli that has been instrumental to the market’s rally.

* Bernanke said Wednesday the U.S. economy was expanding strongly enough for the Federal Reserve to begin slowing the pace of its bond-buying stimulus later this year.

* His comments triggered selloffs in markets that have been supported by the Fed’s $85 billion monthly asset purchases, including Treasuries and U.S. equities. The U.S. dollar rose, its strength continuing into Thursday’s session.

* Even as Bernanke painted a rosier picture of the U.S. economy than some expected, weaker factory output in China and a continued recession in the euro zone kept investors concerned about global growth, adding to pressure on stock markets worldwide.

* S&P 500 futures fell 14 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 107 points, and Nasdaq 100 futures lost 28 points.

* The S&P 500 is setting up to test support near 1,618, its 50-day moving average, and the lows from two weeks ago in the 1,598/1,600 area.

* Forest Laboratories Inc, the specialty drugmaker that counts investor Carl Icahn as a major shareholder, is among a handful of companies interested in bidding for Irish drugmaker Elan Corp Plc , two people familiar with the situation said. Elan’s Irish shares were up 3.4 percent.